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9 Feb 2018

Thai Economy

Official launch of EEC: Key to Thailand’s Economic Development (Current Issue No. 2899 Full Ed.)

         The National Legislative Assembly (NLA) has formally passed the Eastern Economic Corridor (EEC Bill), which is expected to be a key factor to boost the investor confidence in large-scale investments over time by giving them additional incentives, namely, non-tax privileges and a speedier process toward granting related licenses, on top of the government’s existing tax incentives and support through basic infrastructure projects.

          Foreign investors are considered the main players to solidify private investment in the EEC zone, particularly those involved in automotive and electrical & electronics (E&E) industries which are categorized as First S-Curve industries. KResearch views that over the near to medium terms, greater confidence toward the project by international investors will accelerate foreign direct investments there, particularly in existing industries having the potential to add value over the First S-Curve Industries such as modern automobile, smart electronic and health and wellness tourism industries. This prospect should increase the value of foreign direct investments seeking approval from the Office of the Board of Investment to reach THB400 billion by 2022, up from THB283 billion in 2017. Japanese companies are expected to be the major investors. In any case, it is anticipated that investors from China, the US and EU will also participate in high-value investments there, as well.

            Nonetheless, higher demand for public utilities, especially waterworks and electricity may cause some supply shortages. In particular, the overall supply of utility water may be sufficient only to serve demand until 2019.

            ​Over the long term, investment development of some “New S-Curve” industries that require sophisticated technology may face challenges to successful implementation, given the question whether Thailand is sufficiently ready to stay competitive toward such innovation. Thus, the efforts of those involved will need to be comprehensive and serious cooperation of all parties, in line with government initiatives to set up the Eastern Economic Corridor of Innovation (EECi) and Digital Park Thailand (EECd) that would ensure sustainable development of “Thailand’s future industry”.

Thai Economy